MORE to Learn Flashcards
WHAT are three determinants that would shift the entire aggregate supply curve as opposed to a movement along the given curve?
(1) A change in input prices
(2) A change in productivity (e.g. A change in technology); or
(3) A change in the legal-institutional environment in which the industry operates
WHAT is the calculation for Nominal Interest Rate?
IT is the annual real interest rate plus the anticipated rate of inflation
WHAT component of Internal Controls includes the principle that an organization evaluate and communicate internal control deficiencies in a timely manner to those parties responsible for taking corrective action?
This involves the component of: MONITORING
WHAT component of Internal Controls encompasses policies and procedures that ensure management’s directives are carried out?
This involves the component of:
CONTROL ACTIVITIES
WHAT is an important benefit of an Enterprise Risk Management System?
THE Alignment of Management’s risk taking with Shareholder risk appetite
Under COSO, what serves as a starting point for control monitoring?
A baseline understanding of the system
HOW can companies reduce their potential loss from host-government expropriation of their foreign subsidiary?
Financing the subsidiary with local-country capital
WHY? - Local capital would be preferred because the parent company could default on the local creditors in the event that the subsidiary is expropriated from them
Hence, the creditors’ claims would have to be satisfied by the expropriating host government
WHAT committee of the Board of Directors is responsible for overseeing CEO succession?
The nominating/ corporate governance committee
WHAT activity involves collecting data about all segments of the firm’s general environment to understand the effects of economic changes on the firm’s industry?
“Scanning”
If one country has a higher nominal interest rate than another country of interest what will the currency of the country with the higher nominal interest rate be selling at?
IT would be selling at a Forward Discount relative to the country with the lower interest rate
WHY? - Because the country with the higher nominal interest rate would experience higher rates of inflation which would essentially devalue their currency
i.e. their currency would be selling at a forward discount
WHAT affect will the decline in the exchange of the U.S. dollar have?
THIS would benefit U.S. Exporters
WHY? Because this would make their (U.S. Exporters) products less expensive in other countries
WHAT happens when a firm experiences economies of scale?
The short-run average cost of production decreases
WHY? - When a firm experiences economies of scale, the average unit cost of production decreases as production increases
THIS is attributable to spreading fixed costs over a greater number of units of output
THUS, both short-run and long-run average costs are lower because of economies of scale
WHAT is Economies of Scale?
WHEN long-run average cost is declining over a range of increasing output
WHY? - Some of the reasons for this are;
(1) Increased specialization and division of labor
(2) Better use and specialization of management; and
(3) Use of more efficient machinery and equipment
WHAT is the cause of Cyclical unemployment?
Insufficient aggregate demand
WHAT is the cause of Frictional unemployment?
THE imperfections in the labor market
